Union Cabinet: DA and DR rise to 63%, effective 1 July 2026

The Union Cabinet approved a three-percentage-point increase in Dearness Allowance (DA) for Central Government employees and Dearness Relief (DR) for pensioners on 28 October 2026, DD News reported. Effective from 1 July 2026, the decision raises both rates from 60 per cent to 63 per cent of basic pay and pension, respectively.

The Cabinet announcement published on the Prime Minister’s website said the increase is intended to compensate employees and pensioners for rising prices. The Cabinet, chaired by Prime Minister Narendra Modi, approved the additional instalment under the accepted formula based on the recommendations of the 7th Central Pay Commission.

The government estimates that the decision will benefit about 48.54 lakh Central Government employees and 68.71 lakh pensioners. It puts the combined annual cost of the DA and DR increase at Rs 10,016.10 crore.

The approval date and the effective date are distinct. DD News’s report was published on 28 October 2026 and described the Cabinet’s decision that day; the Cabinet announcement specifies that the increase takes effect from 1 July 2026. The approval therefore applies from an earlier date, rather than only from the date it was announced.

What the change from 60 per cent to 63 per cent means

The Cabinet announcement distinguishes between the two payments: DA applies to Central Government employees, while DR applies to pensioners. Their calculation bases also differ, with the allowance expressed as a proportion of basic pay and the relief as a proportion of pension.

DD News explicitly reported that the new rate for both payments is 63 per cent. This makes the decision a three-percentage-point increase in the rate, not a 3 per cent increase in an employee’s entire salary or a pensioner’s total payment.

Calculated from the announced rates, the additional amount is 3 per cent of the relevant basic pay or pension. The cash increase will consequently depend on that calculation base; the announcement does not set one uniform rupee increase for every beneficiary.

There is also a distinction between the change in the rate and the growth in the allowance itself. Moving from 60 per cent to 63 per cent represents a calculated 5 per cent increase in the DA or DR component, obtained by dividing the three-point addition by the previous rate of 60. That calculation describes the allowance or relief component alone, not the change in total salary or pension receipts.

Annual cost and beneficiary coverage

The Rs 10,016.10 crore figure in the Cabinet announcement is an annual estimate covering both employees and pensioners. It is not identified as the cost of payments for the period between the effective date and the Cabinet’s approval.

The government’s beneficiary estimates place the pensioner group above the employee group in size. The announcement does not, however, divide the estimated annual expenditure between DA for employees and DR for pensioners. It therefore provides a combined budgetary estimate rather than a separate cost for each payment.

The stated coverage is Central Government employees and pensioners. The announcement does not establish any corresponding change for state government employees or private-sector workers.

July price figures and the basis for the increase

The Cabinet announcement gives compensation against price rise as the reason for the increase. Separately, the Labour Bureau’s press release dated 31 August 2026 documents changes in retail prices through its Consumer Price Index for Industrial Workers, or CPI-IW.

The index measures retail price movements using prices collected from 317 markets across 88 industrially important centres, according to the Labour Bureau, an attached office of the Ministry of Labour and Employment. Its stated base is 2016=100, meaning that index readings are expressed against that reference level.

For July 2026, the All-India CPI-IW rose by 1.3 points to 153.2 points, from 151.9 points in June. The Labour Bureau put year-on-year inflation under the index at 4.57 per cent, compared with 2.66 per cent in July 2025.

The monthly point increase and the annual inflation rate describe different comparisons. The former measures the movement from June to July; the latter compares prices with the same month a year earlier. The release concerns July prices, although it was published in August; it does not report price movements for the month of the Cabinet’s October approval.

The Labour Bureau’s group-wise figures show food and beverages rising from 157.1 points in June to 158.9 points in July. Housing increased from 140.6 points to 143.0 points, while fuel and light rose from 159.2 points to 159.9 points.

These figures provide documented price context. They do not, by themselves, reproduce the calculation behind the Cabinet’s three-percentage-point decision. The Cabinet announcement identifies the accepted 7th Central Pay Commission-based formula but does not set out its inputs or working.

The announcement establishes the revised rates and their effective date. Neither it nor the DD News report specifies when the revised amounts will be credited or when payments covering the period from 1 July 2026 will be made.